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Irish Revenue Issues Guidance in Respect of DAC7 Reporting Obligations

AUTHORs: Dara Higgins , Matthew Broadstock co-author(s): Saumya Sadanand Services: Tax DATE: 13/09/2023

Irish Revenue has recently issued guidance in respect of the operation of the DAC7 reporting regime in Ireland (the "Guidance"). The Guidance has helpfully clarified how certain aspects of the regime will apply in practice, as set out in further detail below.  

What is 'DAC7'?

DAC7[1] refers to the data collection and reporting regime which applies to certain online platforms, known as Reporting Platform Operators ("RPO").   RPOs fall within the scope of DAC7 reporting obligations where they connect reportable sellers with customers for the purpose of carrying out a 'relevant activity', which comprises any of the following:

  • the rental of immoveable property;
  • the provision of a 'personal service';
  • the sale of goods; and
  • the rental of any mode of transport.

RPOs are required to collect and verify information relating to sellers and to relevant activities facilitated via their platforms.  This information must be reported annually to the tax authorities in one Member State and will then be shared with other EU tax authorities where relevant.  The rationale is to increase the level of information available to tax authorities with a view to improving income tax and VAT compliance by certain suppliers.  2023 is the first year for which reports must be filed and the deadline for reporting this information is 31 January 2024.  Given the impending filing deadline, the Guidance is welcome and has clarified the following practical matters:

Registration date

RPOs must register with Revenue for DAC7 purposes by 30 November 2023, with the registration portal intended to go live on 1 October 2023.  There is therefore a two month window in which relevant RPOs must register. 

Meaning of 'consideration'

The Guidance provides clarity on the manner in which the consideration paid for relevant activities should be reported.  For example, it provides that where consideration is paid in relation to an activity carried out over two quarters, the consideration should be reported in the second quarter.  It also provides that consideration may be in kind. 

Examples have also been provided to illustrate how the consideration should be calculated for certain scenarios, eg, in the context of fees paid by sellers to the RPO and in respect of the RPO paying a portion of the consideration to sellers as an incentive to users. 

Meaning of 'personal services'

The Guidance explains the meaning of 'personal services' and provides practical examples of the types of services which fall within the scope of DAC7 reporting obligations.  For example, online tutoring, consultations and IT services are included in addition to services provided offline such as renovation work, transport services and delivery services.  The Guidance states that where a package of services are offered, some of which include 'personal services' and some of which don’t, it is only the consideration paid for the personal services which must be reported and an apportionment is required insofar as possible.  

Due diligence procedures and measures to take when sellers do not provide the necessary information

The Guidance details the manner in which the due diligence obligations should be carried out by the RPO, for example in respect of verifying the residence of reportable sellers.  Clarification is also provided on the due dates for information collection and completion of due diligence obligations.

Detail is also provided in respect of the measures to be taken when a reportable seller does not provide the necessary information to the RPO to enable it to report information, eg, restriction of access to the seller's platform account and withholding of payments.  There are separate procedures for RPOs involved in the processing of payments to sellers and RPOs who are not involved in payment processing. 

Existing Sellers

The Guidance confirms that for sellers already registered with the RPO on 1 January 2023 the reporting may be deferred until the time that the DAC7 filing for 2024 is made ie, by 31 January 2025.  This is subject to the proviso that relevant due diligence measures have not already been completed for existing sellers by the end of 2023. 

How can we assist you?

DAC7 data reporting requirements are significant and will require businesses to implement robust data collection processes and controls.   We have been assisting a number of multinationals with technical issues arising in the context of their implementation of DAC7.  If you would like to discuss the impact that DAC7 may have for your business, or indeed discuss any other matters, please contact Indirect Tax partners, Matthew Broadstock and Dara Higgins or your usual Matheson contact.

[1] The regime was introduced in 2021 as an amendment to the EU Directive on administrative co-operation in the field of taxation (Directive 2011/16/EU) and has been enacted in Irish law in section 891I TCA 1997 and S.I. No. 705/2022.